Power Grid raises FY27 capex on strong pipeline

Power Grid Corporation of India ([ POWERGRID ]) reported Q2 FY27 revenue growth of 3% year-on-year, while profit after tax increased by 8.4%. The company raised its full-year capital expenditure guidance to Rs 37,000–40,000 crore. Execution constraints such as right-of-way permissions and land acquisition caused management to lower its capitalisation guidance to Rs 25,000–30,000 crore. This means a larger share of capital remains stuck in projects under construction instead of generating immediate regulated returns. While near-term capitalisation looks cautious, the medium-term outlook remains supported by an unexecuted order book of Rs 2.20 lakh crore and an interstate bidding pipeline of Rs 67,200 crore. Capital work in progress stands at Rs 51,036 crore, which is expected to convert into revenue-generating assets by early FY28. Management projects annual capitalisation to climb to Rs 35,000 crore in FY28 and Rs 45,000 crore in FY29 as bottlenecks ease. Diversification into battery storage, a sovereign cloud data centre at Manesar, and advanced HVDC technologies provide additional long-term growth vectors. At approximately 15.5 times estimated FY28 earnings, the valuation remains reasonable for long-term transmission expansion. View: Maintain an overweight stance based on structural transmission demand, while monitoring execution progress on capitalisation targets